DISTRIBUTION OF MTF REVENUE TO COUNTY LOCAL ROAD
FUND ANDCOUNTY PRIMARY ROAD FUND

House Bill 4848 as passed by the Senate

Sponsor: Rep. Joel Sheltrown

House Committee: Transportation

Senate Committee: Transportation

Complete to 7-1-10

A SUMMARY OF HOUSE BILL 4848 AS PASSED BY THE
SENATE 7-1-10

House Bill 4848 would amend Section 12
of Public Act 51 of 1951 (MCL 247.662) to let county road commissions use a
greater share of Michigan Transportation Fund (MTF) revenue on the county local
road system, as opposed to the county primary road system. Under
current law, no more than 30 percent of a county road commission's MTF primary
road system funds may be expended on the county local road system. The bill
would increase that limitation to 50 percent.

With the exception of the addition of an effective date (November 1, 2008), the Senate-passed bill is identical to the House bill as introduced.
The Senate-passed bill differs from the House-passed bill, however; the
House-passed bill had amended language dealing with matching requirements when
using county local road funds on the county primary system.

BACKGROUND INFORMATION:

Public Act 51 of 1951, often referred to simply as "Act
51," governs the distribution of state-restricted transportation revenue –
approximately $1.8 billion in FY 2008-09. This revenue, derived primarily from
motor fuel taxes, and vehicle registration taxes, is distributed by Act 51
formula to other state transportation funds, to special program accounts, and
to local units of government – including 83 county road commissions.[1]
The estimated distribution in FY 2008-09 to county road commissions is $593
million.

One of the initial requirements of Act 51, at the time of
its enactment in 1951, was for the boards of county road commissioners in each
county to select a system of county primary roads – selected on the basis of greatest
general importance to the county. The remaining roads constituted the county
local road system.

Section 12 of Act 51 governs the distribution of MTF revenue
among the 83 county road commissions. Under the Act 51 distribution formula, the
largest share of MTF funds is distributed to county road commissions for the "preservation,
construction, acquisition, and extension of the county primary road system."
A smaller share of MTF revenue is distributed for the county local road system.

Act 51 currently allows a county road commission to use up
to 30 percent of its MTF primary road system funds on the county local road
system. House Bill 4848 would increase that limitation to 50 percent.

There are similar provisions in Section 13 of Act 51
regarding use of MTF funds by cities and villages. Subsection 6 allows a city
or village to transfer MTF revenue from its major street funds to the local
street funds. However, the subsection indicates that first priority is the
major street fund, and the subsection prohibits transfers of more than 50
percent of the annual MTF major street funding unless the city or village had
adopted and followed an "asset management process."

FISCAL IMPACT:

House Bill 4848 would have no direct fiscal impact. It
would not change the distribution of MTF revenue to local units of government
(road commissions, cities, or villages), and would not change the distribution
of MTF revenue to particular county road commissions. It would allow a county
road commission the ability to use a greater share of its MTF revenue on the
county local road system as opposed the primary road system.

Fiscal
Analyst: William E. Hamilton

■ This analysis was prepared by nonpartisan House staff
for use by House members in their deliberations, and does not constitute an
official statement of legislative intent.

[1]
The term "road commission" includes Wayne County Department of Public
Services; Wayne County roads are managed by the Wayne County DPS under the
authority of the Wayne County Board of Commissioners.